Strauss Painting, Inc. v. Mt. Hawley Ins. Co.
| Decision Date | 24 November 2014 |
| Citation | 26 N.E.3d 218,24 N.Y.3d 578,2 N.Y.S.3d 390,2014 N.Y. Slip Op. 08214 |
| Court | New York Court of Appeals Court of Appeals |
| Parties | STRAUSS PAINTING, INC., Appellant–Respondent, v. MT. HAWLEY INSURANCE COMPANY, Respondent–Appellant, and Metropolitan Opera Association, Inc., Respondent. |
Richard Janowitz, Mineola, for appellant-respondent.
Crowell & Moring LLP, New York City (Clifton S. Elgarten, Stuart C. Levene and Jared A. Levine of counsel), for respondent-appellant.
Ahmuty, Demers & McManus, Albertson (William J. Mitchell of counsel), for respondent.
By agreement dated September 3, 2008, Strauss Painting, Inc. (Strauss)/Creative Finishes, Ltd. (Creative) contracted with the Metropolitan Opera Association, Inc. (the Met) to perform work on the Met's premises; specifically, to strip and repaint the rooftop steel carriage track for the opera house's automated window-washing equipment (hereafter, generally referred to as the contract). The contract was a tailored version of the American Institute of Architects' “Abbreviated Form of Agreement Between Owner and Contractor For CONSTRUCTION PROJECTS OF LIMITED SCOPE where the Basis of Payment is a STIPULATED SUM” (AIA Document A107 [1978 ed.] ), with the parties' attached exhibits A through D made a part thereof. The first page of the contract designates the Met as “the Owner” and Strauss/Creative as “the Contractor.”
The contract mandates that Strauss/Creative indemnify and hold the Met harmless, “[t]o the fullest extent permitted by
law,” from and against all claims and damages attributable to bodily injuries “arising out of or resulting from” work performed by Strauss/Creative or any of its subcontractors “caused in whole or in part by [their] negligent act or omission,” and “regardless of whether or not ... caused in part by [the Met].” The contract's provisions addressing insurance obligate Strauss/Creative to purchase and maintain contractors liability insurance to protect the Met from claims under workers' compensation and other employee benefit acts, and “claims for damages because of bodily injury ... which may arise out of or result from [Strauss/Creative's] operations” under the contract, whether undertaken by Strauss/Creative, any of its subcontractors or “anyone directly or indirectly employed by any of them.” Additionally, the insurance “shall include contractual liability insurance” applicable to Strauss/Creative's contractual duty to indemnify and hold the Met harmless; and “[c]ertificates of such insurance shall be filed with [the Met] prior to the commencement of” the construction project.
Importantly, exhibit D, entitled “INSURANCE REQUIREMENTS,” fleshes out Strauss/Creative's insurance obligations. This contract document requires Strauss/Creative to procure three types of insurance: (1) workers' compensation insurance (para [a] ); (2) owners and contractors protective liability (OCP) insurance with a combined single limit of $5 million (para [b] ); and (3) comprehensive general liability (CGL) insurance, with combined coverage for property and bodily injury with a minimum single limit of $5 million, which might be met by umbrella coverage (para [c] ). As relevant to this appeal, paragraph (b) of exhibit D, after identifying OCP coverage as an insurance requirement, specifies that “[l]iability should add [the Met] as an additional insured and should include contractual liability and completed operations coverage”; paragraph (e) directs Strauss/Creative to “furnish [the Met] [with] an Original Owners and Contractors policy,” and also to “provide certificates of insurance for the [Workers'] Compensation, the [CGL] and the ‘Umbrella’ Policy, prior to the commencement of the contract.”
The contract was signed on behalf of the Met as “OWNER” by the opera house's manager, and on behalf of Strauss as “CONTRACTOR” by Ralph Drewes (Drewes) as “VP.”1 Strauss and Creative, although separately owned, shared the same address
and some of the same employees.2 At his deposition, Drewes testified that he ran the day-to-day operations of both companies, and reported to both Victor Strauss, the owner and president of Strauss, and Hillary J. Klein, the owner and president of Creative. Strauss did not have an agreement with District Council 9, the painters' union, while Creative did, and the contract between Strauss/Creative and the Met required the construction project to be carried out by “fully insured union painters.” For this reason, Strauss subcontracted the labor to Creative by agreement dated September 3, 2008, consisting of an unaltered standard form contract with an agreed-upon rider and attachments, and the underlying construction contract between Strauss/Creative and the Met (hereafter, the subcontract).
The subcontract designates Strauss as “the Contractor” and Creative as “the Subcontractor,” and generally requires Creative to undertake the construction project in accordance with the terms of the contract, and to provide specified insurance and indemnify and hold harmless the Met and/or Strauss. The subcontract makes Creative solely responsible for work site safety. Victor Strauss signed the subcontract on behalf of Strauss; Drewes testified that he “believe[d] that [he] signed it on behalf of Creative.”3
Creative began work on the construction project on September 4, 2008. At some point, the Met was supplied with a certificate of insurance for a CGL policy issued by Nova to Creative, stating that the Met and Strauss were additional insureds under the policy.4 The Met was never furnished an original OCP policy covering the construction project, and, as it turned out, neither
Strauss nor Creative actually purchased an OCP policy to protect the Met.
At the time Strauss/Creative contracted with the Met, Strauss had in place a CGL policy issued by Mt. Hawley Insurance Company (Mt. Hawley) for the policy period of November 7, 2007 to November 7, 2008. The policy included ISO (Insurance Services Office, Inc.) form endorsement CG 20 33 07 04 (“ADDITIONAL INSURED—OWNERS, LESSEES OR CONTRACTORS—AUTOMATIC STATUS WHEN REQUIRED IN CONSTRUCTION AGREEMENT WITH YOU”), which specifies as follows:
“WHO IS AN INSURED is amended to include as an additional insured any person or organization for whom [Strauss is] performing operations when [Strauss] and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on [Strauss's] policy ”(emphasis added).
Under the policy, “such person or organization” would be an additional insured with respect to liability for bodily injury so long as the injury was caused, at least in part, by Strauss's acts or omissions or “[t]he acts or omissions of those acting on [Strauss's] behalf.”
Regarding notice, the policy specifies that bodily injury “will be deemed to have been known to have occurred at the earliest time when any insured listed under ... WHO IS AN INSURED or any employee authorized by [an insured] to give or receive notice of an occurrence or claim ... [b]ecomes aware ... that bodily injury ... has occurred or has begun to occur” (internal quotation marks omitted). Further, the insured “must see to it that [Mt. Hawley is] notified as soon as practicable of an occurrence or an offense which may result in a claim” (internal quotation marks omitted).
The Accident, the Personal Injury Lawsuit and Notice to the Insurers
On September 16, 2008, Manuel Mayo (Mayo), a Creative employee, was injured when he fell from a fixed ladder located on the sixth floor of the opera house. This 15–foot ladder led to a hatch door in the ceiling, which provided access to the rooftop
and thus the steel carriage track. Mayo was trying to close the hatch door at the end of his shift when he lost his footing. Drewes first learned of Mayo's accident when the receptionist/office manager at Creative's office fielded a telephone call late in the workday on September 16th from someone at the opera house. The caller (not identified in the record) reported that Mayo had been injured and was being transported to the hospital by ambulance. Drewes happened to be in the office at the time the call was received.
The next day Drewes called his “primary contact” at I. Dachs & Sons, Inc. (Dachs), the insurance broker for both Creative and Strauss, to discuss upcoming liability insurance renewals. During this conversation, Drewes brought up Mayo's accident, and was “[led] to believe by [the broker] that there was no reason to notify the carrier, general liability carrier, because it was a workers' compensation claim.”
Creative timely filed an “EMPLOYER'S REPORT OF WORK–RELATED ACCIDENT/OCCUPATIONAL DISEASE” (Form C–2) to notify the Workers' Compensation Board and Creative's compensation carrier about Mayo's accident. “A couple of days later” or perhaps “a week after” Mayo's accident while Drewes was at the opera house to check on how the construction project was coming along, he mentioned to the Met's house manager that “[t]here was an accident, the man was hurt and he [i.e., Drewes] expected him [i.e., Mayo, the injured worker] to come back to work, [and] at that point it was a worker's comp claim.”5
By complaint dated November 19, 2008, Mayo and his wife sued the Met and Lincoln Center for the Performing Arts, Inc. (Lincoln Center), asserting causes of action for negligence, violations of the Labor Law and loss of consortium in connection with Mayo's work-related injuries (hereafter, the Mayo lawsuit). Mayo alleged that the hatch door was broken and in disrepair, the ladder's rungs were worn and not skid-resistant, and there were no proper safety devices such as a cage, safety belt or safety line. The Met received the summons and complaint in the Mayo lawsuit from the Secretary of State on December 5, 2008.
That same day, the Met's in-house attorney wrote to Strauss and Creative, with a copy to Travelers...
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